CRDP vs CRSC for a retiree with a VA rating of 50% or more

Step 1: Check which program you can get

Most retirees believe they get their pension and their VA pay with no catch. The rule is narrower. CRDP needs 20 qualifying years and a combined VA rating of 50% or more, and Reserve retirees with 20 good years qualify once retired pay starts. CRSC needs a combat-related condition rated 10% or more (combat, hazardous duty, training that simulates war, an instrumentality of war, or a Purple Heart). It is also open to Chapter 61 medical retirees with fewer than 20 years.

Gather three papers first:

Now the exceptions. A rating under 50% with no combat-related condition keeps the dollar-for-dollar offset. A Chapter 61 retiree under 20 years can get CRSC but not CRDP. If a court order divides your retired pay, ask a family law attorney how each payment is treated.

One slip happens here: expecting CRDP to take care of itself. CRDP does start automatically through DFAS, but CRSC never does. It needs an application to your own branch (Army Human Resources Command for Ramon, our example below). Decide which program you can actually apply for before you talk numbers.

• VA rating decision letter
• Retirement orders with years of service
• Latest DFAS retiree account statement

Step 2: When does tax-free CRSC lose?

Tax-free CRSC loses whenever it pays less than the CRDP amount times 1 minus your combined federal and state marginal rate. With $1,200 of CRSC against $2,000 of CRDP, CRSC wins only above a 40% rate, and the top federal rate for 2026 is 37%.

Why the difference? CRDP is restored retired pay, so it is taxable and shows up on the DFAS Form 1099-R. CRSC is special compensation for a combat-related disability and is excluded from federal income. People believe tax-free always beats taxable. It doesn't when the taxable check is much larger.

The trade-off runs both ways. CRDP pays more gross dollars but stops if your combined rating falls below 50%. CRSC is smaller and tax-free, and it keeps paying as long as a combat-related condition stays rated at 10% or more. If every rated condition is combat-related, CRSC usually equals CRDP before tax and wins after tax. With a mixed rating, run the quick test.

A retired sergeant major from Ramon's last unit tells him to take CRSC because tax-free always wins. That advice would cost Ramon $320 each month, $3,840 a year, because his combat-related share pays only $1,200 against $2,000 of CRDP. Catch it by putting both amounts from the DFAS notice side by side and running the quick test before January.

Step 3: Price both now, in 2 years and in 5

A hypothetical household shows the gap. Ramon and Keiko are 43 and 41. He is retiring as an Army master sergeant after 22 years under High-3, she manages a dental office, and they have two kids aged 9 and 12. After 7 moves they have never owned a home. Ramon starts a defense-contractor job at $120,000 in 3 months, and they must settle the SBP election and decide whether his $380,000 TSP stays put while the new 401(k) offers a match.

His retired pay is $3,300 each month. His 70% rating pays $2,000 each month (illustrative, check current VA rates), and his combat-related conditions alone would pay $1,200 in CRSC. At an assumed 24% federal rate, CRDP's restored $2,000 carries a $480 tax cost and leaves $1,520. CRSC leaves $1,200 tax-free. CRDP is $320 ahead each month.

Lay out the full month. With CRDP: $3,300 of taxable retired pay plus $2,000 of tax-free VA pay is $5,300 gross and $4,508 after tax. With CRSC: $1,300 of taxable retired pay plus $2,000 of VA pay plus $1,200 of CRSC is $4,500 gross and $4,188 after tax. The difference is $320 each month.

Timing outweighs the program choice. A VA claim filed within 1 year after separation can be paid from the day after separation. Filing 2 years late gives up 24 × $2,000 = $48,000, and filing 5 years late gives up 60 × $2,000 = $120,000, before COLA. Ramon has about 90 days left, the edge of the pre-discharge (BDD) window of 180 to 90 days before separation. If he misses it, filing before month 12 still protects the effective date.

Savant Wealth Management puts these decisions in order of due date. The VA claim comes first ($2,000 each month at stake). The CRDP or CRSC choice comes second ($320 each month) and gets revisited each January. The table assumes a 20-year retiree like Ramon: two rows carry a one-time due date, and one repeats every year.

This comparison uses an assumed federal rate and a stable rating. It skips individual unemployability at 100%, the reduced CRSC formula for Chapter 61 retirees under 20 years, and divorce decrees. Those cases need the actual VA and DFAS paperwork.

Step 4: Get CRSC approved even if CRDP wins

Plenty of retirees think the choice is made once, so a losing program can be ignored. It can't, because CRSC approval takes months and a branch board decides it. An approval already on file lets you switch in the January open season as soon as your rating or tax rate changes, without waiting. DFAS pays the larger program by default, so holding both costs nothing today. Ramon applies now with his rating letter and the conditions his orders tie to combat, then keeps the approval letter with his tax papers.

Step 5: What happens if your rating or the law changes?

If your rating drops below 50%, CRDP stops, and a change in tax rate can flip the after-tax winner. The quick test settles it each time. Rerun it every January using the current DFAS amounts and your combined marginal rate.

The rules moved in recent years. The CRDP phase-in has ended, so a retiree rated 50% or more now gets full concurrent receipt. CRSC was opened to Chapter 61 retirees. The Supreme Court's Soto v. United States ruling held that the 6-year Barring Act limit does not cap retroactive CRSC, so someone who never applied may be owed older back pay. Plans that assumed a phase-in or skipped CRSC should be redone.

Bills to extend concurrent receipt to medical retirees under 20 years have been introduced in Congress. They are not law as of this writing, so check their status before planning on them.

Things also go wrong after the choice. A VA re-exam can drop the combined rating. A move to a state with income tax raises the combined rate (7 moves so far for Ramon and Keiko). Keiko's raise could push the household into a higher bracket. Check these against your own papers:

• Combined and per-condition VA percentages
• VA waiver line on the DFAS statement
• CRSC application status with your branch
• Combined federal and state marginal rate
• Re-exam date on the VA letter
• January open-season reminder set

What Savant Wealth Management checks first in your VA letter

Savant Wealth Management starts with the conditions on the rating letter that may count as combat-related, the VA waiver line on the DFAS retiree account statement and the marginal rate from last year's return. It then sets both payments side by side after tax. The VA claim's 1-year window and the January open season go on the client's decision list as dated items, next to the Survivor Benefit Plan election and the TSP question, and nothing is promised before the numbers are in front of you.